Day rate to salary calculator
Enter a day rate to find the permanent salary that leaves the same take-home once both routes have paid their tax.
Rates for the 2026/27 tax year. Checked 6 November 2026.
| Contract billed | £110,000.00 |
|---|---|
| Contract take-home via Ltd | £68,987.52 |
| Of billed | 62.7% |
| Permanent salary with the same take-home | £101,131.23 |
| Simple annualised rate (rate × days) | £110,000.00 |
A permanent role also brings paid leave, sick pay and an employer pension, so a fair comparison salary is lower than this figure.
Worked example: £500 a day
£500 a day is worth roughly a £98,000 salary, not £110,000. Over 220 days through a limited company, with a £12,570 salary and £2,000 of costs, it leaves about £68,988 after corporation tax and dividend tax. An employee needs roughly £98,000 to take home the same, because PAYE above £50,270 runs at 40% tax plus 2% NI.
What the equivalent salary leaves out
A permanent job also brings paid holiday, sick pay, employer pension and notice, which the day rate has to fund. When you weigh a contract against a permanent offer, treat the equivalent salary as the most the contract could be worth to you.
When this calculator is wrong for you
- You are inside IR35; the contract is taxed like employment, so rate times days is closer.
- You leave profit in the company rather than drawing it all.
- You live in Scotland.
Questions people ask
Is a £500 day rate the same as a £110,000 salary?
No. Rate times days is company revenue, not what you keep, and corporation tax, dividend tax and employer NI all come out first. At 220 days, £500 a day is closer to a £98,000 salary.
What if the contract is inside IR35?
Then rate times days is much closer to a salary, because the assignment rate less employer costs is already close to PAYE pay. Use the IR35 comparison for that case.
Does the equivalent salary include pension?
Only what you enter as an employer contribution. A permanent employer typically adds 3% to 10% on top of salary, so knock that off the equivalent figure.
Is 220 days a year realistic for a contractor?
Only with no gaps. 220 assumes a full year, so lower it if you expect time between contracts, and the equivalent salary falls with it.
How this is worked out
Contract take-home follows the limited-company model: revenue less salary, employer NI, expenses and pension; corporation tax with marginal relief; all post-tax profit as dividends; personal tax on salary and dividends. The equivalent salary is found by searching for the PAYE salary whose take-home (after income tax and employee NI) equals the contract take-home.
Full formulas, rounding rules and test cases are on the methodology page. Every rate update is listed in the changelog.